Source: AMLA final report draft
- Anti-money laundering
AMLAR supplemental acts
- RTS on risk assessment to select institutions for direct supervision
Article 5 Group-wide risk assessment
This is a draft act
This text has been parsed from the AMLA final report draft as published on 16 December 2025. While we run a suite of validations, the automated parsing can result in errors. Also, before it is finally adopted by the Commission, its wording, numbering and references may change, and entire articles might be removed or added.
Summary What does Article 5 of the RTS on risk assessment to select institutions for direct supervision say?
This article extends the entity-level residual risk scoring methodology established in Articles 2, 3, and 4 to the group level.
The Authority, working together with financial supervisors, is required to calculate a single group-wide residual risk score by aggregating the individual residual risk scores of all Union-based credit and financial institutions within a group.
The same aggregation logic applies to solo institutions that operate through one or more branches.
A weighted arithmetic average formula is used for this aggregation, with the design deliberately skewing the result upward where riskier entities are present within the group.
The resulting score is then converted into the same four-tier classification used at entity level: low, medium, substantial, or high.
Important points:
- The Authority, in collaboration with financial supervisors, is required to calculate and classify the group-wide residual risk profile by aggregating entity-level residual risk scores of all Union-based members of the group.
- The aggregation formula is designed to give greater weight to riskier entities within the group, meaning a small number of high-risk members can pull the overall group score upward.
- Each entity's relevance within the group — and therefore its weight in the calculation — is measured using three data points: number of customers, total transaction volumes, and total assets held or managed, all as of 31 December of the previous year.
Springlex's summary of the article, a reading aid, not a substitute for the legal text.
The Authority, in collaboration with financial supervisors, shall calculate the group- wide risk profile of a group of credit or financial institutions by aggregating the entity- level residual risk scores of all the credit institutions and financial institutions established in the Union, and which are part of the group.
This paragraph shall also apply, mutatis mutandis, to credit institutions or financial institutions that are not part of a group, and that carry out domestic or cross-border activities through one or more branches, for calculation of the aggregated risk profile of such a credit institution or a financial institution and of its branches.
The aggregation referred to in paragraph 1 shall be based on a weighted arithmetic average method, with weights proportional to the relevance of each credit institution or financial institution within the group and enhancing the contribution of riskier entities. For the purpose of the aggregation, the following formula shall be applied:
Where:
: number of entities in the group
: residual risk score of entity i
: weight representing the relevance of entity i within the group
: parameter to enhance the contribution of risker entities
The relevance of each credit institution or financial institution within the group shall be measured in accordance with the data points listed in Section A of Annex I, based on:
the number of its customers on 31 December of the previous year; and
the total amount in euro of incoming and outgoing transactions carried out in the previous year or the equivalent in national currency; and
the total amount in euro of the assets held or managed by the credit institution or financial institution on 31 December of the previous year.
The result of the aggregation carried out in accordance paragraph 2 shall be converted into a numerical group-wide residual risk score with two decimal places, ranging between 1, that corresponds to the lowest level of risk, to 4, that corresponds to the highest level of risk.
Depending on the residual risk score of the group of credit and financial institutions, its residual risk profile shall be classified as low, medium, substantial or high, in accordance with the following conversion rule:
Springlex and this text is meant purely as a documentation tool and has no legal effect. No liability is assumed for its content. The authentic version of this act is the one published in the Official Journal of the European Union.
Definition
crypto-asset services
Definition
supervisor
Definition
financial mixed activity holding company
Definition
crypto-asset service provider
Definition
credit institution
- a credit institution as defined in Article 4(1), point (1), of Regulation (EU) No 575/2013;
- a branch of a credit institution, as defined in Article 4(1), point (17), of Regulation (EU) No 575/2013, when located in the Union, whether its head office is located in a Member State or in a third country;
Definition
parent undertaking
- for groups whose head office is located in the Union, an obliged entity that is a parent undertaking as defined in Article 2, point (9), of Directive 2013/34/EU that is not itself a subsidiary of another undertaking in the Union, provided that at least one subsidiary undertaking is an obliged entity;
- for groups whose head office is located outside of the Union, where at least two subsidiary undertakings are obliged entities established in the Union, an undertaking within that group established in the Union that:
- is an obliged entity;
- is an undertaking that is not a subsidiary of another undertaking that is an obliged entity established in the Union;
- has a sufficient prominence within the group and a sufficient understanding of the operations of the group that are subject to the requirements of this Regulation; and
- is given the responsibility of implementing group-wide requirements under Chapter II, Section 2 of this Regulation;
Definition
crypto-asset
Definition
property
Definition
group
Definition
financial institution
- an undertaking other than a credit institution or an investment firm, which carries out one or more of the activities listed in points (2) to (12), (14) and (15) of Annex I to Directive 2013/36/EU of the European Parliament and of the Council(32), including the activities of currency exchange offices (bureaux de change), but excluding the activities referred to in point (8) of Annex I to Directive (EU) 2015/2366, or an undertaking the principal activity of which is to acquire holdings, including a financial holding company, a mixed financial holding company and a financial mixed activity holding company;
- an insurance undertaking as defined in Article 13, point (1), of Directive 2009/138/EC of the European Parliament and of the Council(33), insofar as it carries out life or other investment-related assurance activities covered by that Directive, including insurance holding companies and mixed-activity insurance holding companies as defined, respectively, in Article 212(1), points (f) and (g), of Directive 2009/138/EC;
- an insurance intermediary as defined in Article 2(1), point (3), of Directive (EU) 2016/97 where it acts with respect to life insurance and other investment-related insurance services, with the exception of an insurance intermediary that does not collect premiums or amounts intended for the customer and which acts under the responsibility of one or more insurance undertakings or intermediaries for the products which concern them respectively;
- an investment firm as defined in Article 4(1), point (1), of Directive 2014/65/EU of the European Parliament and of the Council(34);
- a collective investment undertaking, in particular:
- an undertaking for collective investment in transferable securities (UCITS) as defined in Article 1(2) of Directive 2009/65/EC and its management company as defined in Article 2(1), point (b), of that Directive or an investment company authorised in accordance with that Directive and which has not designated a management company, that makes available for purchase units of UCITS in the Union;
- an alternative investment fund as defined in Article 4(1), point (a), of Directive 2011/61/EU and its alternative investment fund manager as defined in Article 4(1), point (b), of that Directive that fall within the scope set out in Article 2 of that Directive;
- a central securities depository as defined in Article 2(1), point (1), of Regulation (EU) No 909/2014 of the European Parliament and of the Council(35);
- a creditor as defined in Article 4, point (2), of Directive 2014/17/EU of the European Parliament and of the Council(36) and in Article 3, point (b), of Directive 2008/48/EC of the European Parliament and of the Council(37);
- a credit intermediary as defined in Article 4, point (5), of Directive 2014/17/EU and in Article 3, point (f), of Directive 2008/48/EC, when holding the funds as defined in Article 4, point (25), of Directive (EU) 2015/2366 in connection with the credit agreement, with the exception of the credit intermediary carrying out activities under the responsibility of one or more creditors or credit intermediaries;
- a crypto-asset service provider;
- a branch of a financial institution referred to in points (a) to (i), when located in the Union, whether its head office is located in a Member State or in a third country;
Definition
third country
Definition
funds